Missouri Sales Tax Audit Readiness Checklist
Missouri sales tax compliance is a state responsibility that applies to most retailers, service providers, and online sellers operating in the state. Sales tax applies to tangible personal property and certain services at a rate set by Missouri law and local jurisdictions.
If your business collects or owes sales tax, the Department of Revenue may conduct an audit to verify that all required amounts were reported and paid correctly. An audit can examine records from multiple years and may result in additional taxes owed, penalties, and interest charges.
Understanding what triggers an audit and how to prepare reduces confusion and helps ensure your records are organized and complete. Ignoring an audit notice can lead to unfavorable determinations made without your input, larger financial exposure, and potential enforcement action. This checklist explains what a sales tax audit means, what steps to take if you receive notice, and what to expect as the process unfolds.
What This Issue Means
A Missouri sales tax audit is a formal examination by the Department of Revenue to verify that your business correctly calculated, collected, and paid sales tax. The audit may focus on a specific time period and may review your sales records, exemption documentation, deduction claims, and payment history.
For filed returns, the audit period is generally limited to three years due to the statute of limitations. If no returns were filed, there is no statute of limitations, and the auditor will examine at least five years of records.
An audit does not automatically mean the state believes you committed fraud or intentionally violated the law. It is a standard compliance review that many businesses experience.
Why the State Issued This or Requires This
The Missouri Department of Revenue conducts sales tax audits for several common reasons
- Random selection is one trigger; the state audits a sample of businesses to ensure
statewide compliance.
- Changes in your business structure, a significant increase in reported sales, or a change
in your industry classification can prompt a review.
- Third-party information, such as a complaint or data mismatch with other state agencies,
may also initiate an audit.
- If you have never filed a sales tax return, the state may audit to determine if you owe
back taxes.
The state’s purpose is to ensure all applicable sales tax is collected and remitted correctly, protecting state revenue and creating fair competition among businesses.
What Happens If This Is Ignored
If an audit notice is ignored, the Missouri Department of Revenue will proceed with the examination using only the information in your files. You will lose the opportunity to explain discrepancies, provide supporting documentation, or correct errors in your favor.
The state may decide based on estimates, sampling, or other methods that could result in a larger assessment than warranted. Once the audit is complete, Missouri issues a formal assessment.
If you disagree, you can appeal, but appealing after an unfavorable determination is more difficult than participating in the original audit. Additional penalties and interest will continue to accrue on any unpaid taxes throughout the audit and collection process.
What This Does NOT Mean
Receiving an audit notice does not mean criminal charges are being filed against you. An audit is a civil tax matter focused on verifying compliance, not prosecuting intentional wrongdoing.
Missouri has not automatically determined that you owe additional tax; the audit is an investigation to find out.
You are not required to hire a professional representative, though many businesses do. An audit notice also does not mean all your records will be seized or your business will be shut down during the process. Auditors typically conduct the examination through a request for documents and information, not an investigation raid.
Checklist: What to Do After Receiving a Sales Tax Audit
Notice
Step 1: Read the Audit Notice Carefully
1. Open and review the complete notice from the Missouri Department of Revenue.
2. Identify the audit period covered, which refers to the dates the state is examining.
3. Locate the specific contact person’s name and phone number listed on the notice.
4. Review the list of requested documents and records.
5. Check whether the notice requires an in-person meeting or allows correspondence by mail or email.
Step 2: Gather Records and Documentation
6. Locate all sales tax returns you filed during the audit period.
7. Collect sales records, invoices, and transaction documentation for the period under review.
8. Find copies of exemption certificates if you claimed any sales tax exemptions.
9. Gather supporting records for any deductions or adjustments you claimed on your returns.
10. Retrieve bank statements and payment records showing sales tax deposits to the state.
11. Organize records in the order requested by the notice or in chronological order.
12. Make copies of all documents; do not send originals unless instructed to do so.
Step 3: Contact the Department of Revenue
The auditor establishes timelines through communication with the taxpayer, as no specific statutory response deadline applies to the initial audit notice. Call the auditor listed on the notice to confirm you received the audit request.
Ask for clarification on any documents you cannot locate or do not understand. Confirm the deadline for submitting documents, and ask whether documents can be sent by mail, email, or another method.
Step 4: Organize and Submit Documentation
Create a clear index or list of all documents you are submitting. Number or label each document so the auditor can reference it easily.
Include a cover letter that explains what you are submitting and identifies your business. Send all records by the deadline using a method that provides proof of delivery, and keep copies of everything you submit for your records.
Step 5: Track Communication and Follow-up
Document the date you submitted materials and the method used. Note the auditor’s name and any confirmations you receive.
Wait for the auditor’s follow-up requests or questions, and respond promptly to any additional requests for information or clarification. Do not assume silence means the audit is complete; audits can take several months.
- Keep all audit-related correspondence in a separate folder.
- Do not discard any documents until the audit is fully completed and resolved.
- Continue filing sales tax returns on time during the audit process, and continue remitting
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
Step 6: Maintain Records After the Audit
sales tax payments on schedule.
What Happens After This Is Completed
After you submit your documentation, the auditor reviews your records and prepares findings.
According to the Missouri Department of Revenue, an auditor spends one week on average examining records at the business location for a medium-sized sales tax audit, with follow-up meetings scheduled afterward.
You may receive additional contact with follow-up questions or requests for additional information. Once the review is complete, Missouri issues a formal assessment, which states whether additional tax is owed, whether a refund is due, or whether your return was correct as filed. Any changes the auditor made will be included in the assessment explanation.
If additional tax is owed, the assessment will show the amount and explain how you can pay or appeal. Taxpayers have sixty days from the date of the assessment to pay or appeal.
Common Mistakes to Avoid
Missing the communication deadline with the auditor can result in a determination made without your input. Submitting incomplete records creates problems because if the auditor cannot verify a claim or deduction due to missing supporting documentation, the state may disallow it.
Ignoring follow-up requests delays the audit and may harm your position. Failing to keep copies of everything prevents you from referencing what you provided if the auditor asks questions later. Not responding to the final assessment closes off your opportunity to challenge the findings if you disagree.
Frequently Asked Questions
Can I hire someone to represent me in the audit?
Yes, you can work with an accountant, bookkeeper, tax professional, or attorney who can submit documents, attend meetings, and answer questions on your behalf.
What if I disagree with the auditor’s findings?
You can appeal by filing a petition with the Missouri Administrative Hearing Commission within sixty days of the assessment date, and payment is not required to file an appeal.
Do I have to pay the assessment while I appeal?
No, payment is not required to appeal an assessment in Missouri; you may choose to pay under protest, which stops interest accrual, or you may appeal without payment, though interest continues to accrue.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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